Preliminary Audi Volkswagen Settlement Approved

Los Angeles, CA: Volkswagen and Audi have agreed to pay sludge-related maintenance costs for nearly 480,000 vehicles as part of a proposed settlement conditionally approved in federal court. The order filed Thursday, September 23, 2010 by Judge Joseph L. Tauro in Boston, defined the group, or "class," that can benefit from the settlement as all current and former owners and lessees of Audi's A4 (model year 1997-2004) and Volkswagen's Passat (model year 1998-2004) that were equipped with a 1.8 liter turbo engine.

The class action lawsuit alleges that the 1.8 liter turbo engines were overly prone to the formation of oil sludge and coking deposits. These deposits cause abnormally high incidence of engine failure even when maintained according to the manufacturer's maintenance recommendations.

The multidistrict litigation, which was consolidated in Massachusetts in 2006, also alleges that the auto companies failed to honor an 8-year unlimited warranty extension issued in 2004 by denying claims brought by vehicle owners with sludge-related engine failure.

Under the settlement agreement, the companies have agreed to cover 100 percent of the maintenance costs for owners/lessees with proper documentation of required oil changes, and 50 percent for those without proper documentation. The settlement also provides owners and lessees eligibility for a 10-year/120,000 mile enhanced oil sludge warranty. In addition, all class members who currently own or lease the covered vehicles will receive revised oil maintenance recommendations.

The Court also ordered that notice to the settlement class will be provided by mail and published in USA Today on or before December 29, 2010. The Final Approval Hearing is scheduled for March 11, 2011.

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Published on Sep-27-10